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Optimal Water Resource Allocation…

Chapter 1

Introduction

Water plays the most important role into humankind. Apart from drinking it to

survive, water is widely used in domestic purposes, such as cooking, bathing and washing

clothes. Water is also essential in agricultural sector for the healthy growth of farm crops

and farm stock and in industrial processes to use in manufacturing of many products. It is

a limited natural resource and in many areas, water shortage is considered to be one of the

most critical issues to be resolved.

Water resource scarcity has become one of the determinants which limits social and

economic sustainable development. People face periods of water shortages due to high

demand and inconsistent supply. Population growth has made water scarcity a major

problem in many countries. As more people increase, the demand for water also increase.

Based on scarcity, economics defines the conditions required to secure the most efficient

allocation of scarce resources in a variety of contexts. According to United Nations, water

scarcity is denoted by 1000m3/capita/year. Below the level of 1700m3/capita/year is

denoting water stress. Resource efficiency under this study normally refers to the ratio of

resource inputs on one hand to economic outputs and social benefits on the other

(EEA, 2012).

Water scarcity is both a natural and a human-made phenomenon. There is enough

freshwater on the planet for seven billion people but it is distributed unevenly and too much

of it wasted, polluted and unsustainably managed (World Water Development Report 4,

2012). It occurs even in areas where there is plenty of rainfall or freshwater. How water is
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conserved, used and distributed in communities and the quality of the water available can

determine if there is enough to meet the demands of households, farms, and the

environment.

Water allocation has been identified as a priority water management issue. This

priority has come from the increasing demand on water, especially from the rural sector.

These scarcities have an effect in productivity. There is a perception that the current water

allocation system does not courage optimal use of water and the improvements in allocation

practices could increase the value of water resources to communities (Sustainability, 2015).

Globally, the problem of water allocation is considered as severe and countries are working

towards effective water management system which requires a strategic approach involving

both equitable and sustainable management (Hemson et al., 2008).

Chapter II

Review of Related Literature and Studies

The related literature of this study was based and adopted from the previous studies,

which are somehow similar to the researcher’s present study. The other sources are

gathered from books and related materials pertaining to water allocation. It also includes

the conceptual framework.

Water Resource and its Allocation

Increasing pressure on water allocation, in terms of growing demand and

decreasing availability due to climate change, require the adoption of appropriate

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optimization strategies in order to develop correct and efficient management of available

resources. Over the last decades, optimization methods have been widely applied in water

resources problems and many optimization models have been developed. These state-of-

the-art models have been reviewed by several. Optimization of water systems follows

different approaches, changing with the scale on which the system is analyzed, and various

types of optimization techniques have been proposed. In the context of climate change, due

to the variability of rainfall and the scarcity of water, the conflicts between different uses,

as well as the current structural and management problems must be overcome (Maiolo et

al, 2017).

. The National Water Resources Board (NWRB) has identified some major problems

concerning water use and scarcity: Water resources are unevenly distributed throughout

the Philippines, often resulting in water shortages in highly populated areas, especially

during the dry season. Lack of water allocation foments conflicts in use and water

allocation, e.g., the Angat Reservoir when Metropolitan Waterworks and Sewerage System

withdraws water over and above its existing water rights. High water loss due to leaking

pipes and illegal connections (2016).

Solving problem about water shortage requires a clear identification and proper

modelling of the allocating rules that account for every possible combination of supply and

demand conditions (Ilich, 2008). A common approach is to utilize optimization methods

(Yeh, 49 1985; Labadie, 2004; Rani and Moreira, 2010), among which the most widely

applied is the linear programming (LP). This approach relies on LP to find the optimal

feasible way of routing water in a regional system, given that the allocation objective,
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governing equations of physical water movement and operational constraints are

appropriately linearly formulated. This formulating process requires sufficient knowledge

of the optimization method as well as the under-analyzing problem to transform the

physical and operational features into mathematical representation. Moreover, satisfying

the allocating rules usually requires trial-and-error process to determine the most

appropriate set of weighting factors or cost coefficients, which multiplying with respective

allocated water constitutes the objective function. The lack of a systematic and precise way

to establish and interpret the objective function may prevent the model from being

entrusted or accepted by all involved stakeholders. For example, Juízo and 61 Lidén (2010)

reported the experiences of implementing an optimization-based model on trans-boundary

water allocation in South Africa. They found that “the results from the system analysis tool

are not easily understood by the stakeholders, and government representatives of different

countries bear some suspicion about the results.”

Water resources have been allocated from earliest times due to global and local

challenges that threaten the availability of water where ecosystems are suffering and

conflicts between water users are increasing (Clements, 2015; Gurria, 2009; Le Quesne,

2007). There are ways to address these challenges one being water allocation and water

rights. In many countries water policies and laws have been formulated as the major

solutions and efficiency tends to be a perfect goal for the allocation of water (Gurria, 2009;

Hodgson, 2006).

Efficiency of water allocation

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The notion of efficiency for water sources has two main interpretations which are

technical and allocation efficiency. Water distribution systems efficiency is measured by

comparing the water that is delivered to final users with the water that is treated or lost in

the distribution system. Therefore, the allocation system is through granting water

entitlements through a variety of administrative and geographical levels. In water use,

technical efficiency has recently been interpreted in the sense of increasing output which

is production of water and there are no limits to conservation, productivity or income

generation (Le Quesne et al., 2013).

A variety of institutional arrangement can be done to make sure that there is

efficient allocation of resources such as dictatorship, central planning or free markets. Any

of these could in principle achieve an efficient allocation of water resources (Common et

al.2011).

It is regarded as a resource that is generally non-substitutable and renewable but

still reduced as a resource with time. There is an increasing overall demand for water, water

use is intensifying, and there are limits to its use (Lewis and Tietenberg, 2012). Equity,

environmental protection while balancing supply and demand promote the efficient use of

water. One of the Dublin Principles state that water as an economic good (Gurria, 2009).

Optimality in water resources allocation

The efficiency of water allocation is determined through the concept of optimality

but a resource use is optimal if it maximizes that objective given any relevant constraints
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that may be operating. Therefore, the allocation of water resources cannot be optimal unless

it is efficient and hence efficiency is a necessary condition for optimality. Efficiency in

general, is the measure of the extent that is achieved in implementing certain goals or

objectives. Efficiency in allocation is different from technical efficiency in production. In

allocation, efficiency requires three conditions to be fulfilled which are consumption,

production and product-mix efficiency (Common et al., 2011). An optimal water resources

allocation model is based on supply constraints. Optimization focuses on evaluation of

allocation efficiency and finding the optimal solution from millions of possible alternatives

given certain constraints. An example of such an algorithm is linear programming

(Droogers, 2013). The optimum solution derived is predicted on perfect knowledge of each

of the parameter value. The exogenous parameters of a linear programming are not usually

known with certainty and estimated by statistical techniques.

Linear Programming

Linear programming can be defined as planning to maximize profits, benefits, or

minimize loss and wastes in any given system with the variables having exponent value of

one. The term programming means the planning, that can lead to the maximization and

minimization of the goals and objectives while the linear denotes that the power of the

process or equation variable of one. Linear programming comes in forms of mathematical

formulations of processes and as such are often called linear programming problems or
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optimization problems. Linear programming is also a mathematical technique for

determining a way to achieve the best outcome in a given mathematical expression with

some set of inequalities whose terms, maintain linear relationships, (Gupta et al, 2010).

According to McCarl and Spreen (2011), there are seven important assumptions

that support the Linear programming relative to the problem being modelled. The first three

assumptions deal with the appropriateness of the formulation and the last four deals with

the mathematical relationships within the model.

The first assumption is objective function appropriateness. Secondly, is the decision

variables appropriateness which is the specification of the decision variables that have been

included in the model? Thirdly, is constraint appropriateness where there are sub

assumptions and the constraints must identify fully the boundary that is placed on the

decision variables? The fourth assumption is proportionality which deals with the

contribution per unit of each decision variable to the objective function. The fifth

assumption is based on additivity which deals with the relationships among the decision

variables. The sixth assumption is divisibility which refers to all problems formulation

assumes that all decision variables can take any non-negative value including fractional

ones. The seventh and the last assumption is certainty which requires that parameters be

known constants.

After developing a linear programming model, a sensitivity analysis is conducted

by varying one of the exogenous parameters and observing the sensitivity of the optimal

solution of that variation. Objective (goal) function is to optimize through consumer

satisfaction in water demand for domestic uses such as consumption, hygiene, amenities
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and production uses (Bao and Jia, 2014). Before embarking on using linear programming

it is necessary to know various aspects such as information on water consumption, supply

and the cost of water. Basically, linear programming has three components which are

decision variables which under the research quantity, price and sources for both obtaining

and provision water services will be taken into consideration as the evaluation parameters.